23 Jul 2015
Fed could set up September’s lift-off – TDS
FXStreet (Edinburgh) - Strategists at TD Securities see the Fed could open the door to a rate hike in September at next week’s FOMC meeting.
Key Quotes
“We believe the Fed may well use the July FOMC statement to set up the September hike, by nudging the market further with tweaks to the language”.
“Most likely is this comes from the upgrades to economic conditions in the first paragraph”.
“But it is also possible the Fed removes “nearly” from the “nearly balanced” characterization of the economic risks, which would be a clear sign of a September hike, though even in 2004, the Fed saw risks are “roughly equal” still in the meeting before hiking so keeping this unchanged will not rule out September”.
“And even stronger though less likely change would be suggesting policy accommodation is removed “gradually.”
“Overall, the risk within this FOMC meeting is that it sets up to be a more hawkish outcome than most expect”.
Key Quotes
“We believe the Fed may well use the July FOMC statement to set up the September hike, by nudging the market further with tweaks to the language”.
“Most likely is this comes from the upgrades to economic conditions in the first paragraph”.
“But it is also possible the Fed removes “nearly” from the “nearly balanced” characterization of the economic risks, which would be a clear sign of a September hike, though even in 2004, the Fed saw risks are “roughly equal” still in the meeting before hiking so keeping this unchanged will not rule out September”.
“And even stronger though less likely change would be suggesting policy accommodation is removed “gradually.”
“Overall, the risk within this FOMC meeting is that it sets up to be a more hawkish outcome than most expect”.